In the United States, approximately thirty-five years ago, Congress, the Treasury Department and the banking industry established a set of rules and procedures for the processing of checks and financial transaction documents, which made it easier to process these documents automatically with a high degree of accuracy. Steps also were taken to decrease the potential counterfeiting of such transaction documents by requiring key data to be encrypted with magnetic ink. As a result, the check and financial transaction industry has developed into a multi-billion dollar industry, with most of the error-prone manual check processing minimized through automation. In addition, counterfeiting also was limited to acceptable levels. A key factor, which permitted this automation and counterfeiting inhibition to occur, is the use of Magnetic Ink Character Recognition (MICR) symbology, accompanied with various forms of quality control operations at the banks and at the financial printing companies.
Once MICR encoded checks became widely available, increased speed and accuracy of check processing and proofing equipment minimized the rate of errors with good quality documents. At the same time, the rate of growth of check processing personnel has been smaller than the rate of growth of check usage.
Recently, advanced check printing technology for printing the MICR symbols has been developed. This new check production capability is widely available, and has been placed in the hands of operators with less skill than the older technologies. The result is that quality control of MICR check documents has suffered. More significantly, however, this technology is now so common that counterfeiters have been producing checks which pass the ANSI (American National Standards Institute) MICR signal level and format standards. This causes the detection of counterfeit checks printed with this technology to occur at a much later point in the transaction processing cycle, and, therefore, makes it more difficult to prevent monetary losses from occurring as a result of such counterfeit checks.
Essentially, five techniques have been used, or have been proposed, to inhibit counterfeiting of checks. The first of these techniques is to impregnate a pattern into the document paper which is translucent. When this pattern then is exposed with a high-energy light during a copying process, the pattern is revealed (usually the word "VOID") in the copied document. The pattern, however, does not disturb the original. A variation of this approach is a film coating the document. Another technique is to print a photograph of the payee into the non-clear band portions of a MICR document. A third technique, which has been proposed is to print, in the non-clear band area of a MICR document, a special symbol with irradiated inks tuned to a special frequency, which then can be detected with a receiver tuned to that special frequency. A variation of this approach is a foil stamping embossed on the document. Another proposal is to print a magnetic stripe in the middle of each MICR guaranteed payment document, which allows the encryption of MICR data in duplicate, but in magnetic strife read format (that is, credit card format). A fifth proposal is to use microprinted lettering as a border of parts of the document.
Both of the first two techniques have limited applications, and can be circumvented easily by existing technology and fraud practices. The latter three techniques, the special symbol, the magnetic strife, and microprinting, do provide the potential of raising the skill level and equipment required for counterfeiting. To be effective, however, these latter three techniques also require immediate substantial modification of presently installed MICR document processing equipment, and substantial changes in current MICR document printing equipment. The irradiated ink technique, to be effective, also requires stringent controls on the distribution and control of the irradiated inks used. Availability of these inks would invalidate the counterfeit-inhibiting capability. None of the five techniques provide visual plus automatic scan and audit trail features.
In an effort to reduce the incidence of false reads in MICR document processing in the financial transaction network, ANSI (American National Standards Institute) has assigned two digit spaces within the MICR line for use as self-check digits for two fields. Each field uses a different error checking method; and the choice of method on one field is at the discretion of the issuing financial institution. However, the ANSI and American Bankers Association (AEA) approved approach does not inhibit counterfeiting, since a copy of such a check easily can be printed to allow it to be accepted at the point of transaction. Therefore, such a counterfeit check will pass through the financial transaction network successfully. The ANSI standards and banking procedures allow documents failing to pass the error digit check to be corrected with a repair strip glued to the bottom of the document, or else inserted into an envelope with corrected information. Then either of the two corrections can be processed through the balance of the network. However, there is no method now, nor previously proposed, for the financial network which allows for the differentiation of valid and counterfeited MICR documents during the document processing cycle.
Some MICR document processors have been developed which read the same MICR line of symbols with both a magnetic scanner and an optical scanner. The character recognition results of the outputs of the two scanners then are compared in order to reduce the number of false reads. This approach, however, is incapable of discriminating between two sets of MICR symbol lines, and, therefore, cannot discriminate between valid and counterfeit MICR documents.
The patent to Ranauto U.S. Pat. No. 4,175,776 is directed to another somewhat different attempt at printing a check document which is difficult to counterfeit. The check disclosed in the Ranauro patent is printed with two different types of ink particles. The particles are selected to produce significantly different optical reflectivities for detection by the human eye. In addition, the reflectivities cause erroneous copying by a copy machine to inhibit counterfeiting of the document by means of copy machine reproduction.
The patent to Fischer U.S. Pat. No. 3,108,824 is directed to a technique using a mixture of standard four-color inks and magnetic ink in the printing of colored advertising coupons. The patent, however, is directed at automating coupon processing, and does not provide anti-counterfeiting techniques.
It is desirable to provide an improved document and processing system for transaction documents, such as checks, which incorporates the standardized MICR encoding, which overcome the disadvantages of the prior art, which significantly inhibits counterfeiting, and which can be used in conjunction with presently installed MICR recognition equipment and point-of-transaction equipment, with relatively minor modification.